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Contract
DRAFT
For Supply of debarking equipment
between
PT. _____
________________________________, Indonesia
and
__________ CO., LTD.
_______________, Japan
Contract No.: _________________
Date of Signature: ____________
pg. 2
Table of Contents
Article 1 Object of Contract
Article 2. Definition
Article 3. Scope of the Contract
Article 4. Contract Price
Article 5. Payment
Article 6. Delivery and Liquidated Damages
Article 7. Packing and Marking
Article 8. Inspection
Article 9. Erection, Commissioning, Performance Test
Article 10 Guarantee and Warranty
Article 11. Claim
Article 12. Infringement of Patents
Article 13. Termination
Article 14. Force Majeure
Article 15. Governing Law
Article 16. Taxes and Duties
Article 17. Arbitration
Article 18. Effectiveness of the Contract and Miscellaneous
Article 19. Liability of the Seller
Article 20. Others
Article 21 Annexes
pg. 3
Contract
Contract No. : ______________
Place of Signatures: KTH’s headquarters
This contract, made and entered into on _________ (--, --, 2020) through friendly negotiation
by and between :
1. PT. _________________, a corporation organized and existing under the laws of the
Republic of Indonesia with its registered place of business at ______________, Republic
of Indonesia(hereinafter referred to as the “Buyer”), as one party, and
2. _________________., LTD., a corporation organized and existing under the laws of
Japan with its registered place of business at _____________, Japan
(hereinafter referred
to as the “Seller”), as the other party..
NOW THEREFORE, the Buyer and the Seller agree to enter into this with the terms and
conditions:
Article 1. “Object of Contract”
The Buyer agrees to purchase from the Seller and the Seller agrees to sell and supply to the
Buyer the Contract Equipment specified in the Technical Specification in Annex1, for
installations to the Buyer’s newly planned wood-chip making project at Pangkalan Bun
Province in Kalimantan, Indonesia, which comprise a wood-log debarking equipment
(hereinafter referred to as “Debarker”)together with spare parts and relevant services such
as engineering drawings for a chain-live log-deck and some portions of steel structures of the
Debarker for the Buyer’s local fabricating purpose, and supervisory services to assist the
Buyer with its Erection & Commissioning & Performance Test, as specified in the Technical
Specification in Annex1, , Annex 2 and Annex 4.
Article 2. Definitions
In this contract unless the context otherwise defines:
2.1. “Contract”, means this agreement between the Buyer and the Seller signed by the
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parties in order to execute this project.
2.2. “Technical Specification”, means the technical specifications of the Debarker and the
spare parts for the Debarker, which is agreed between the Buyer and the Seller and
specified in Annex1.
2.3. “The wood-log debarking equipment” means a debarker of the Seller’s own make,
namely Fuji King Barker and hereinafter referred to as “Debarker”, in the Contract.
2.4. “Buyer’s Bank”, means the one of the first-class banks in Indonesia designated by the
Buyer and accepted by the Seller.
2.5. “Contract Currency”, means the currency in which the payment is made under the
Contract, namely US Dollar, which is hereinafter referred to as ”US$” in the Contract.
2.6. “Contract Equipment”, means the Debarker and spare parts to be manufactured and
supplied by the Seller, as specified in the Technical Specification in Annex1.
2.7. “Equipment Price”, means the fixed price of the Contract Equipment, specified in
Annex 1, and Annex 3 excluding the Supervisory service fees as stated in Article 4.1,
hereof payable by the Buyer to the Seller by two of irrevocable Letter(s) of Credit as
specified in Article 5.1 under the Contract.
2.8. “Supervisory service fees”, means the lump sum charge, of the supervisory service
provided by a personnel (supervisor) sent from the Seller to the Mill site, payable
separate from the Contract Price by the Buyer through bank remittance to the Seller,
as specified in Article 4.4, Article 5.2 and Annex 2.
2.9. “Effective Date of the Contract”, means the date that the Contract enters into force and
effect upon fulfillment of all conditions stated in Article 18, namely the date on which
the Seller acknowledge the receipt of an “irrevocable confirmed Letter of Credit at
Sight”(hereinafter referred to as “L/C at Sight”)by thirty percent(30%)value of the
Contract Price as down payment, which shall be issued by the Buyer in conformity with
the Contract within fifteen(15)days from the date of the Contact signing, as specified
in Article 5.1.
pg. 5
Should the L/C at Sight, after issued, be found defective and necessary to make
amendment, the Buyer shall take prompt actions to complete amending the aforesaid
L/C at Sight in a proper manner within one(1)calendar week. The date, on which the
Seller confirms to an advising bank the completion by the Buyer of amendment, shall
be deemed to be a new “Effective Date of the Contract” for the Both Parties.
In the event that the amendment of the L/C at Sight takes a time exceeding one(1)
calendar week, FOB Japan delivery time of the Contract Equipment shall be affected
and delay itself by the same length in excess of one one (1) calendar week.
2.10. “day” means calendar day.
2.11. “Mill site”, means the place where the Contract Equipment is installed, erected, and
commissioned, namely at KTH’s new wood-chip making mill at Pangkalan Bun
Province, Kalimantan, Indonesia.
2.12. “Port of Shipment”, means the international commercial seaports in Japan to be
designated by the Seller.
2.13. “Port of Unloading”, means Jakarta seaport, Indonesia, as designated by the Buyer.
2.14. “Seller’s Bank”, means the following two banking companies.
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
SHIZUOKA BRANCH
ADDRESS:
8 Miyuki-cho, Aoi-ward, Shizuoka-city, Shizuoka Pref. Japan
Or
SUMITOMO MITSUI BANKING CORP.
SHIZUOKA BRANCH
ADDRESS:
7-4, Ohtemachi, Aoi-ward, Shizuoka city, Shizuoka Pref. Japan
2.15. “Erection”, means the erection to assemble the Contract Equipment supplied by the
Seller as specified in the Technical Specification in Annex 1.
Erection shall be done by the Buyer, under supervision and advices given at the Mill
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site to the Buyer’s personnel by personnel (supervisor) sent out from the Seller.
2.16. “Performance Test ”, means the physical tests to be carried out by the Buyer to measure
the debarking throughput capacity of the Debarker under load condition, as specified
in the Performance Guarantee in Annex 4.
2.17. “Acceptance Certificate of the Performance Test (hereinafter referred to as “APT”),
means the document to be signed by the both of the Buyer and the Seller and issued
to the Seller upon the successful completion of the Performance Test, to confirm that
the result of the Performance Test has satisfied the requirements or reached the
design capacity specified in the Performance Guarantee in Annex 4.
On this date, the takeover by the Buyer of the Debarker shall be done and the
Mechanical Warranty commences.
2.18. “Mechanical Warranty”
This is a warranty given to the Buyer for the durability of mechanical structures and
functions of the Debarker, which keeps valid for the warranty period of twelve (12)
months from the issuing date of the APT, but not exceeding in any case nineteen (19)
months from the date of the Seller’s FOB Japan last main shipment, as specified in
Article 10.
2.19. “Either Party” means either the Buyer or the Seller, and “Both Parties” means both of
the Buyer and the Seller, who are specified in the Contract.”
2.20 “Engineering Drawings”, means the engineering drawings and technical information
provided by the Seller to the Buyer, for the purpose of Buyer’s local fabricating and/or
procuring the necessary parts and/or equipment, as specified in Annex 2.
Article 3. Scope of the Contract
The Seller shall, in accordance with the terms and conditions of the Contract, sell
and supply on a CIF Jakarta port (Incoterms 2010) basis to the Buyer the Contract
Equipment specified in Technical Specification in Annex1. Relevant services such as
engineering drawings in Annex 1 and supervisory services in Annex 2 shall be
provided by the Seller, as well.
pg. 7
Article 4. Contract Price, Supervisory service fees
4.1. The Equipment Price, excluding total amount of the Supervisory service fees specified in
Article 4.4, amounts to US$2,773,850.00-(CIF Jakarta port, Incoterms 2010)
(say: _______- US$ only).
4.2. The Equipment Price is a fixed and firm price.
4.3. The Equipment Price shall include the Contract Equipment specified in Article 3.1,, and
Annex 3, but shall not is excludeing the Supervisory service fees specified in Article
4.4, Article 5.2 and Annex 2.
4.4. Total amount of the Supervisory service fees is US$24,468.00- as a lump sum of item
(G) plus item (I) shown in Annex 3, payable by the Buyer as specified in Article 5.2 and
Annex 2, but not included in the Equipment Price.
4.5 The total contract price, as the aggregate of the Equipment Price and total amount of
the Supervisory service fees, is US$2,797,468.00-as specified in Annex 3 4.
Article 5. Payment
5.1. The Buyer shall make payment of, the Equipment Price and the Supervisory service
fees, in the following method:
A down payment by thirty percent(30%)value of the Equipment Price Contract Price
shall be settled by a L/C at Sight which shall be first opened to the Seller by the Buyer
at its own cost through the Buyer’s bank accepted by the Seller, within fifteen
(15)
days
from the date of the Contract signing. The date on which the Seller acknowledges the
receipt of the L/C at Sight issued in conformity with the Contract, shall be the Effective
Date of the Contract for the Both Parties. In the event there is any non-conformity with
the Contract found in the issued L/C at Sight, the Buyer shall immediately proceed
amending a part of non-conformity within one(1)calendar week. The date of the
amendment’s completion shall be the Effective Date of the Contract.
The rest balance payment by seventy percent(70%)value of the Contract Price shall
be settled by a L/C at Sight which shall be secondly issued by the Seller within three
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(3) months months from the date of the opening the first L/C specified in the above
paragraph in this Article. In the event, whether both or either the opening of the L/C at
Sight and/or the amending work is delayed from the due date, total length of such a
delay exceeds a period of one(1)calendar week, FOB Japan port(s) delivery time of
the Contract Equipment shall be affected and delay by the excess part of days
exceeding the aforesaid one(1)calendar week.
The aforesaid each payment by each of the L/C at Sight shall be executed through a
negotiating bank, against presentations by the Seller of the negotiable document that
shall be prepared in conformity with the stipulated in the L/C at Sight, as specified in
following Article 5.1.1, and Article 5.1.2,
Total amount of the Supervisory service fees, which shall be charged by the Seller to
the Buyer separate from the Contract Price, shall be settled by the Buyer through bank
remitting by telegraphic transfer, upon its receipt of a commercial invoice sent from the
Seller, as specified in Article 5.2.
5.1.1. Down payment of the Contract Price
Thirty percent(30%)value of the Equipment Price specified in Article 4.1, i.e.,
US$831,900.00-
(say:831,900.00- US$ only)
, as down payment, shall be paid by the
Buyer by the L/C at Sight, against the presentations by the Seller of following
document to his negotiating bank:
a) One(1)original and five(5)copies of manually signed commercial invoice
indicating the Contract Price, and the amount of the down payment to be paid;
b) One
(1)
original of the “Letter of Guarantee” for the down payment, as specified in
Annex 5.
5.1.2. The rest balance payment of the Equipment Price
Seventy percent(70%)value of the Equipment Price specified in Article 4.1, i.e.,
US$1,941,100.00- (say:1,941,100.00 US$ only), as rest balance payment, shall be
paid by the Buyer by the L/C at Sight, pro rata upon last main shipment, against the
presentations by the Seller of following document to his negotiating bank.:
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a)Two
(2)
originals and three
(3)
copies of clean on board ocean Bill of Loading made
out to order, blank endorsed, notifying the Buyer and marked “FREIGHT
PREPAID” ;
b)One(1)original and five(5)copies of manually signed commercial invoice
indicating the Equipment Price, and the rest balance amount to be paid, and the
itemized price;
c)One(1)original and five(5)copies of packing list indicating the shipping weight,
number and the date of the corresponding invoice;
d)
Two
(2)
copies of Certificate of Treatment issued by the Seller’s relevant authorities
certifying that all the wood packing materials have been anti-insect infestation
treated, in the event wood packing materials is used.
e)One (1) original Letter of Guarantee for” Performance Bond”, as specified in Annex
7.
f) One (1) original Letter of Guarantee for “Delayed Delivery Bond” specified in
Article 6.1 and Article 6.4.
5.2. Payment of the Supervisory service fees
Total amount of the Supervisory service fees is US$24,468.00- specified in Article 4.4
4.2, which shall be charged by the Seller to the Buyer separate from the Contract Price
and settled by the Buyer through bank remitting by telegraphic transfer, upon the
receipt by the Buyer of a commercial invoice that shall be issued in the full amount by
the Seller at the time when a supervisor is first dispatched to the Mill site. In case any
extra supervisory service, other than the initially scheduled quantity of man-days and
expenses included in US$24,468.00- is additionally required or locally occurs, fees of
such additional supervisory service shall be calculated at the rates specified in Annex
3 and charged on a monthly basis to the Buyer for the settlement by bank remitting
upon the receipt of a commercial invoice sent from the Seller.
The withholding tax for the Supervisory service fee specified in Article 4.4 and in
Annex 3 shall be borne by the Seller.
Article 6. Delivery and Liquidated Damages for delayed delivery
6.1. The delivery time and the Seller’s obligations under the Contract shall commence on
the Effective Date of the Contract as per Article 18. The Seller shall complete the
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delivery of the Contract Equipment within 10 months on a FOB Japan port(s)
(Incoterms 2010) basis from the Effective Date of the Contract.
6.1.1. Partial shipment will be allowed.
6.2. Port of Shipment:International seaport(s) in Japan, to be designated by the Seller.
6.3. Port of Unloading:Jakarta port, Indonesia, as designated by the Buyer.
6.3.1. The Seller shall, five(5) days before the expected date of shipment, advise the Buyer
by fax or by e-mail of Contract No:_____, commodity, estimated quantity of packing,
value, the number of packages, gross weight, gross measurement and the date of
readiness at the Port of Shipment.
6.4. In case the Seller fails to make the delivery of the Contract Equipment within the FOB
Japan port(s) delivery time specified in Article 6.1, the Seller shall pay to the Buyer
liquidated damages at the following rates:
Should the delivery of the last main shipment of the Contract Equipment be delayed
from the date stipulated in Article 6.1, by reasons attributable to the Seller, the Seller
shall pay to the Buyer liquidated damages after the grace period to six (6) weeks, as
exclusive remedy for such delay in the amount of 0.5% (zero point five per cent) of the
Equipment Price specified in Article 4.1 per seven (7) days. However, the aggregate
amount of the liquidated damages shall not exceed 5 % of the Contract Price specified
in Article 4.1. The Buyer is entitled to draw out the liquidated damages at the aforesaid
rates up to the amount of Delayed Delivery Bond specified in Article 5.1.2, that is the
letter of guarantee to be issued by the Seller’s bank, in such a form specified in Annex
8 9. A copy of this letter of guarantee shall be submitted to the Buyer within 5 (five)
months from the Effective Date of the Contract and valid until 1 (one) month after final
shipment date.
6.5 In the event that the Buyer, on the due date specified in Article 5.1 and after a grace
period to one (1) calendar week, fails to issue to the Seller the L/C at sight for the rest
balance payment by seventy percent(70%)value of the Equipment Price and/or fails
to complete making the L/C’s amendments if any, the same number of days in excess
of the grace period of one (1) calendar week shall be added to the length of FOB
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Japan port(s) delivery time specified in Article 6.1.
Article 7. Packing and Marking
7.1. The Seller shall have the Contract Equipment packed strongly and shall take
measures to protect the Contract Equipment from moisture, rain, rust, corrosion
and shock, etc.
The packing material made of coniferous wood, if any, shall be anti-insect- infestation
treated and a certificate of treatment to be presented to the Buyer, as specified in the
item (d) in Article 5.1.2.
7.2. The loose accessories in package or bundle shall be labeled by the Seller, indicating
Contract No., name of main equipment, name of accessories and their position
number and accessory number marked on the bill of material and packing list in
English. Spare parts and tools shall be marked with the words” SPARE PARTS” or
“TOOLS” besides the above-mentioned particulars.
In accordance with the requirements in loading, unloading and shipping Contract
Equipment, such packages shall be conspicuously marked in English with “HANDLE
WITH CARE”, “RIGHT SIDE UP”, “KEEP DRY” and other terms appropriate in the
international transportation.
7.3. Two(2)duplicate copies of detailed packing list shall be enclosed or attached to each
package of the Contract Equipment.
Article 8. Inspection
8.1. The Seller shall inspect the Contract Equipment in accordance with its normal quality
inspection program.
8.2. During a period of the Seller’s manufacturing the Contract Equipment or parts thereof,
the Buyer or its authorized representative shall be entitled to carry out inspections in
regard to the quality of the materials used as well as compliance with relevant
documentation. Such inspections shall be carried out at the place of manufacture
during normal working hours without undue disturbance of the manufacture at times
pg. 12
separately agreed upon between the Both Parties in each case. All expenses relating
to such inspection shall be borne by the Buyer.
8.3 The Buyer shall, within a period not exceeding one(1)calendar week from the arrival
date of the Contract Equipment at the Mill site, carry out its own inspection into the
inside of the packages or containers in order to ascertain no occurrence of damage,
defect, shortage, deficiency, or discrepancy on the Contract Equipment. In case any
such non-conformity is found, the Buyer shall immediately keep the Seller informed of
it.
8.4. Should any shortage, defect or other non-conformity with the contract, attributable to
the Seller, be found with the delivered Contract Equipment during the open package
inspection, an inspection certificate shall be issued by the Inspection Authorities and
be taken by the Buyer as effective evidence to claim against the Seller.
In the event that any short shipment, defective or wrong goods of the Contract
Equipment is attributable to the Seller, the Seller shall replace and/or supplement the
shortage and/or undelivered pieces of equipment free of charge on Delivery Duty paid
(DDP) basis to Buyer’s office in Jakarta without undue delay upon receipt of the
Buyer’s claim.
Any defect or shortage to the Contract Equipment which is not attributable to the Seller
shall be replaced without undue delay against separate remuneration.
Article 9. Erection, Commissioning, Performance Test,
9.1 The Erection, Commissioning and Performance Test of the Contract Equipment shall
be carried out by the Buyer on its responsibility, under the supervision and support by
a personnel (supervisor) sent out to the mill site from the Seller.
9.2. Conditions and details of types of fees and rates, as well as the fee of supervisory
service, to be rendered to personnel of the Buyer by a personnel (supervisor) sent to
the Mill site from the Seller, are as specified in Annex 2 3 and shall be born by the
Buyer.
9.3. The starts and completions of each Erection, Commissioning and Performance Test,
pg. 13
shall be carried out, by keeping the original schedule of the project, as specified in the
Preliminary Schedule in Annex 10.
Article 10. Guarantee and Warranty
10.1. The Seller guarantees that the Contract Equipment shall be brand new, unused and
manufactured for the Contract, shall be in accordance with the Technical Specification.
The Contract Equipment shall be suitable for the use and purpose under the Contract.
10.2. The Seller guarantees that the Technical Specification shall be complete and correct
so as to meet the requirements of design, erection, commissioning, and performance
test of the Contract Equipment.
10.3. Mechanical Warranty
The Seller undertakes to remedy any defects in the Contract Equipment or any part
thereof resulting from faulty design, materials, workmanship or misleading by the
supervisor(s) dispatched by the Seller during a warranty period of twelve(12)months
from the date of issuing the APT, however, not exceeding nineteen(19)months from
the date of the last main shipment of the Contract Equipment FOB Port of S
(Incoterms
2010)as applicable.
During a warranty period, in the event the Seller neither makes any response nor
takes any action except keeping silence to the Buyer for a period exceeding thirty(30)
days from the date when the Seller is first noticed by the Buyer of defects or damage
on the Contract Equipment and requests for remedy or repair, the Buyer is entitled to
draw out up to the amount of Warranty Bond, that is the Letter of Guarantee for 5% of
the Equipment Price to be issued by the Seller’ Bank valid from date of the APT for
twelve (12) months in such a form specified in Annex 7 8 and to be submitted to the
Buyer upon the APT being issued.
10.4. Limitations of Mechanical Warranty
10.4.1 The Mechanical Warranty shall not be deemed to cover normal wear or tear;any
defects resulting from improper, incomplete or unskilled maintenance, handling,
storage, erection or operation of or any modification made by the Buyer to the
Contract Equipment. The Buyer shall bear the dismantling and erection expenses
relating to the reparations or replacements. The Seller’s obligations under the
pg. 14
Mechanical Warranty shall in no case extend beyond the Contract Equipment as
specified in the Technical Specification in Annex 1. However, the Seller shall, upon the
Buyer’s request, pay quick attention to it in order to determine and inform the Buyer
what is the best and most reasonable solution whether to dispatch the necessary parts
for replacement, or to submit the detailed procedures for local repair, or dispatch its
own personnel (technician) for repair, against remuneration.
10.4.2. The valuation on the defects as specified in Article 10.4.1 shall be determined based
on the written consent from the Both Parties.
10.4.3. If the Both Parties failed to reach an Contract on the defects as specified in Article
10.4.2, than the Both Parties hereby agree that the valuation on the defects shall be
determined based on the examination that is conducted by an independent expert that
will be appointed and agreed by the Both Parties.
10.5. Performance Guarantees
The Seller shall guarantee to the Buyer, “debarking throughput capacity” specified in
the Performance Guarantee in Annex 4 5.
In case the result of the Performance Test with the Debarker under all the conditions
and the procedures in Annex 4 5 is found by no means able to attain, the design
throughput capacity values specified in the Performance Guarantee in Annex 4 5, the
Buyer is entitled to draw out up to the amount of Performance Bond specified in Article
5.1.2, that is the Letter of Guarantee to be issued by the Seller’s Bank in a such alike
sample form specified in Annex 6 7 and submitted to the Buyer.
Article.11. Claim
11.1. In case the Contract Equipment is not in accordance with the Technical Specification in
Annex 1, or fails to fulfill the Performance Guarantee specified in Article10.5, prior to
the APT due to the Seller’s responsibility, during the design, manufacture, Erection,
Commissioning, Performance Test, the Buyer has the right to lodge claims against the
Seller for the following remedies:
a. Repair defective Contract Equipment or eliminate the defects or discrepancies if
any on the Contract Equipment, at the Seller’s expenses.
pg. 15
b. In case the Seller fails to dispatch his personnel to the Mill site, the Buyer has the
right to eliminate the defects or discrepancies by himself for the Seller’s account.
11.2. Limitation of liability
Notwithstanding anything aforesaid, it is expressly agreed that neither party shall bear
any responsibility for consequential or indirect damage of the other party.
Article. 12. Infringement of patents
12.1 In the event of a claim by any third party against the Buyer based on the infringement
of any intellectual property rights arising from the use of the Contract Equipment, the
Buyer shall give the Seller a notice and the Seller shall take up the matter with the third
party at its own cost in the Buyer’s name and with the Buyer’s assistance and
indemnify the Buyer for any costs, compensations or damages to the Buyer arising
therefrom.
Article. 13. Termination
13.1. The Buyer may, for the Seller’s breach of the Contract, by written notice of default sent
to the Seller, terminate the Contract in whole or in part;
if the Seller fails to perform any obligations under the Contract and does not remedy its
failure within a period of sixty(60)days after the receipt of the default notice from the
Buyer.
13.2. The Seller may, for the Buyer’s breach of the Contract, by written notice of default sent
to the Buyer, terminate the Contract in whole or in part;
if the Buyer fails to perform any obligations under the Contract and does not remedy
its failure within a period of sixty(60)days after the receipt of the default notice from
the Seller.
13.3. The Seller shall specifically be entitled to terminate the Contract in whole or in part
with immediate effect by written notice to the Buyer stating the cause of termination, if
the opening by the Buyer of the L/C at Sight by thirty percent (30%) value of the
Contract Price under Article 5.1 and Article 5.1.1 has been delayed for more than forty
(40)days from the date of the Contract signing.
pg. 16
The Seller shall specifically be entitled to terminate the Contract in whole or in part
with immediate effect by written notice to the Buyer stating the cause of termination, if
the opening by the Buyer of the L/C at Sight by seventy percent (70%) value of the
Contract Price under Article 5.1 and Article 5.1.2 has been delayed for more than one
hundred and forty four (144) days from the date of the Contract signing. In the case
where the Contract is terminated by the Seller in this manner, although the Seller shall
be entitled to wholly use the down payment as a part of liquidated damages to the
various costs of such as purchasing component parts and raw material for the
manufacture, engineering and drawing, ordering from the subcontractors, and others
that have occurred at the Seller during the period until the termination of the Contract,
the Buyer shall keep its responsibility for promptly compensating the Seller for if any
part of cost borne by the Buyer in excess of the amount of down payment by settling
the relevant charge if any arising from the Seller.
13.4. The party to this Contract may at any time terminate the Contract, by giving written
notice to the other Party in case the same becomes bankrupt or otherwise insolvent,
provided that such termination does not prejudice or affect any right of action or
remedy which has accrued or will accrue thereafter to the Party hereto.
Article. 14. Force Majeure
14.1. Should Either Party be prevented from performing any of its obligations under the
Contract due to the event of Force Majeure, such as war, serious fire, typhoon,
earthquake, flood and any other events which could not be expected, avoided and
overcome, the affected party shall notify the other party of occurrence of such an event
by fax or e-mail and send by registered airmail a certificate issued by competent
authorities or agency confirming the event of the Force Majeure within fourteen(14)
days following its occurrence.
14.2. The affected party shall not be liable for any delay or failure in performing any of its
obligations due to the event of Force Majeure. However, the affected party shall inform
the other party by fax or e-mail the termination or elimination of the event of Force
Majeure as soon as possible.
14.3. The Both Parties shall proceed with their obligations immediately upon the cease of
pg. 17
the event of Force Majeure or the removal of the effects and the term of the Contract
shall be extended correspondingly. Should the effect of the event of Force Majeure last
for more than one hundred and eighty(180)days, Either Party has the right to
terminate the Contract by a written notice.
Article. 15. Governing Law
15.1. This Contract is governed by, and shall be construed in accordance with, the laws of
the Republic of Singapore.
15.2. Any power of attorney or other document executed in connection with this Contract or
the transactions provided for in this Contract will be governed by, and construed in
accordance with, the laws of the Republic of Singapore.
Article. 16. Taxes and Duties
16.1. All taxes, duties, levies and cess,(Excise Duty, Central Sales Tax, Service Tax
including cess, Entry Tax, State VAT, Local Sales Tax, Tax Deduction at Source, and
etc.)payable in Indonesia pursuant to existing and/or new laws and/or regulations in
connection with this contract shall be borne and paid by the Buyer.
16.2 All taxes, levies and duties arising inside Japan in connection with the Contract shall be
born by the Seller.
Article. 17. Arbitration
17.1. Any disputes arising out of or in connection with this Contract shall be settled through
friendly discussion between both parties. In case no Contract is reached, the disputes
shall be finally settled in accordance with the Rules of Conciliation and Arbitration of
the International Chamber of Commerce by the arbitrators appointed in accordance
with those Rules. The arbitration shall take place in Singapore, and shall be conducted
in the English language.
17.2. Notwithstanding any reference to arbitration, both the Both Parties shall continue to
perform their respective obligations under the Contract unless otherwise agreed.
pg. 18
Article. 18. Effectiveness of the Contract and Miscellaneous
18.1. The Contract shall become effective, after signing the Contract by Both Parties, with
the following conditions:
a)Receipt by the Seller of an irrevocable confirmed Letter of Credit at Sight (referred
to as “L/C at Sight”) which is issued by the Buyer in favor of the Seller through the
Buyer’s bank accepted by the Seller, and is in conformity with the stipulated in
Article5.1.1 in the Contract.
b)Receipt and acknowledgement by the Seller of, amendments completed by the
Buyer to the first issued L/C at Sight, in case of occurrence of some discrepancy or
non-conformity in it.
Upon the completion of the above conditions, the Buyer and the Seller shall exchange
faxes or e-mails to confirm the date on which the execution of the Contract starts.
Should the Contract not come into force latest twenty(20)days after the Contract
signing by Both Parties, the Seller reserves his rights to adjust FOB Japan port(s)
delivery time.
18.2. The validity period of the Contract is three(3)years. Any unsettled credit and debt
under the Contract shall not be affected by the expiration of the Contract. The debtor
shall affect its obligation of reimbursement to the creditor.
18.3. The Contract shall be made in four(4)originals, two(2)for the Buyer and two(2)
for the Seller.
18.4. Annexes to the Contract are integral parts of the Contract and shall have the same
legal force as the text of Contract itself. In case of discrepancy between the text of the
Contract and Annexes, the text of the Contract shall prevail.
18.5. All amendments, supplements and alterations to the terms and conditions of the
Contract shall not become binding unless made in written form, signed by the
authorized representatives and approved by respective authorities if required.
18.6. Unless otherwise specified in the Contract, any terms of delivery shall be interpreted in
pg. 19
accordance with International Rules for the Interpretation of Trade Terms (Incoterms
2010 ) and GENERAL CONDITIONS FOR THE SUPPLY OF PLANT AND
MACHINERY FOR EXPORT 188 (United Nations Economic Commission for Europe).
Any Letter of Credit to be opened hereunder shall be in accordance with ICC Uniform
Customs and Practice for Documentary Credits (UCP500).
18.7. No assignment of this Contract or any right or obligation under the Contract shall be
made by the Either Party to a third party without the previous consent of the other
party.
18.8. Notices
18.8.1. The communication between the Both Parties shall be conducted in English in written
form. Any notice or other formal communication between the Both Parties shall be
conducted in English in written form and may be delivered in person, or sent by post or
fax to the party to be served at as follows:
To the Buyer:
PT. ____________
______________(Address)
Indonesia
Fax. :
Tel. :
E-mail:
Attn. :
To the Seller:
_________________., Ltd.
______________(Address)
Japan
Fax. :
Tel. :
Attn. :
or at such other address or fax number as it may notify to the other party under this
clause. Any notice or other document sent by post shall be sent by recorded delivery
post (if the place of destination is the same as its country of origin) or by overnight
courier (if its destination is elsewhere).
18.8.2. Any notice or other communication shall be deemed to have been given:
a) if delivered in person, at the time of delivery; or
b) if sent by post, at 10.00 a.m. on the second business day after it was put into the
post or at 10.00 a.m. (local time at the place of destination) on the fifth Business
pg. 20
Day after it was put into the post by overnight courier; or
c) if sent by fax, on the date of transmission, if transmitted before 3.00 p.m. (local
time at the place of destination) on any Business Day and in any other case on the
Business Day, following the date of transmission.
18.8.3. In proving the giving of a notice or other communication it shall be sufficient to prove
that delivery in person was made or that the envelope containing the communication
was properly addressed and posted, either by recorded delivery post or by prepaid
airmail, as the case may be, or that the fax was properly addressed and transmitted,
as the case may be.
18.9. Except as otherwise expressly provided herein, nothing in this Contract shall be
considered or interpreted as constituting the relationship of the Both Parties as a
partnership, association, or other relationship in which a Party may be liable for the
acts of omissions of any other Party, and nothing in this Contract shall be construed so
as to constitute a Party has any right or authority to assume or create in any way any
obligation of any kind or to make any warranty or representations, expressed or
implied, in the name or on behalf of any other Party.
18.10. If at any time any provision of this Contract is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, this shall not affect or
impair: the legality, validity or enforceability in that jurisdiction of any other provision of
thisContract ; or the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of thisContract .
18.11. This Contract constitutes the whole contract between the Both Parties relating to the
transactions contemplated by this Contract and supersedes all previouscontracts,
whether oral or in writing, between the Both Parties relating to these transactions.
Article. 19. Liability of the Seller
Irrespective of the legal reason, the Seller shall not be liable for any indirect or consequential
damages such as but not limited to:loss of or reduced production, loss of or reduced
profit, loss of materials of production, increased cost of production, or of damages not
incurred on the goods of the Seller’s delivery themselves.
pg. 21
Article.20. Others
20.1 The Buyer is responsible for supplying an adequate number of qualified and capable
laborers to the Seller during the period of Erection, Commissioning and Performance
Test.
20.2. The Buyer shall supply the Seller with all technical data and necessary information, if
any needed for the Seller’s engineering, designing, and etc., as soon as possible.
Article. 21. Annexes
Following Annexes under this Contract shall form an integral part of this Contract and shall
have the same force as the Contract itself:
Annex 1. : Technical Specifications
Annex 2 : Supervisory Service
Annex 3 : Price Schedule
Annex 4 : Performance Guarantee
Annex 5 : Refund Bond
Annex 6 : Performance Bond
Annex 7 : Warranty Bond
Annex 8 : Delayed Delivery Bond
Annex 9 : General Conditions for the Supply of Plant and Machinery for
Export 188 (United Nations Economic Commission for Europe
ECC)
Annex 10 : Preliminary Schedule
pg. 22
IN WITNESS WHEREOF, the Both Parties hereto have caused their duly authorized
representatives to execute this Contract the day and year first written above.
The Buyer:PT. ________________________
by -----------------------------------------------
Mr._________________
Title: Director
The Seller:_________________., LTD.
by -----------------------------------------------
Mr. ________________
Title: President Director

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Contract For Supply of debarking equipment_CLEAN DRAFT.doc

  • 1. pg. 1 Contract DRAFT For Supply of debarking equipment between PT. _____ ________________________________, Indonesia and __________ CO., LTD. _______________, Japan Contract No.: _________________ Date of Signature: ____________
  • 2. pg. 2 Table of Contents Article 1 Object of Contract Article 2. Definition Article 3. Scope of the Contract Article 4. Contract Price Article 5. Payment Article 6. Delivery and Liquidated Damages Article 7. Packing and Marking Article 8. Inspection Article 9. Erection, Commissioning, Performance Test Article 10 Guarantee and Warranty Article 11. Claim Article 12. Infringement of Patents Article 13. Termination Article 14. Force Majeure Article 15. Governing Law Article 16. Taxes and Duties Article 17. Arbitration Article 18. Effectiveness of the Contract and Miscellaneous Article 19. Liability of the Seller Article 20. Others Article 21 Annexes
  • 3. pg. 3 Contract Contract No. : ______________ Place of Signatures: KTH’s headquarters This contract, made and entered into on _________ (--, --, 2020) through friendly negotiation by and between : 1. PT. _________________, a corporation organized and existing under the laws of the Republic of Indonesia with its registered place of business at ______________, Republic of Indonesia(hereinafter referred to as the “Buyer”), as one party, and 2. _________________., LTD., a corporation organized and existing under the laws of Japan with its registered place of business at _____________, Japan (hereinafter referred to as the “Seller”), as the other party.. NOW THEREFORE, the Buyer and the Seller agree to enter into this with the terms and conditions: Article 1. “Object of Contract” The Buyer agrees to purchase from the Seller and the Seller agrees to sell and supply to the Buyer the Contract Equipment specified in the Technical Specification in Annex1, for installations to the Buyer’s newly planned wood-chip making project at Pangkalan Bun Province in Kalimantan, Indonesia, which comprise a wood-log debarking equipment (hereinafter referred to as “Debarker”)together with spare parts and relevant services such as engineering drawings for a chain-live log-deck and some portions of steel structures of the Debarker for the Buyer’s local fabricating purpose, and supervisory services to assist the Buyer with its Erection & Commissioning & Performance Test, as specified in the Technical Specification in Annex1, , Annex 2 and Annex 4. Article 2. Definitions In this contract unless the context otherwise defines: 2.1. “Contract”, means this agreement between the Buyer and the Seller signed by the
  • 4. pg. 4 parties in order to execute this project. 2.2. “Technical Specification”, means the technical specifications of the Debarker and the spare parts for the Debarker, which is agreed between the Buyer and the Seller and specified in Annex1. 2.3. “The wood-log debarking equipment” means a debarker of the Seller’s own make, namely Fuji King Barker and hereinafter referred to as “Debarker”, in the Contract. 2.4. “Buyer’s Bank”, means the one of the first-class banks in Indonesia designated by the Buyer and accepted by the Seller. 2.5. “Contract Currency”, means the currency in which the payment is made under the Contract, namely US Dollar, which is hereinafter referred to as ”US$” in the Contract. 2.6. “Contract Equipment”, means the Debarker and spare parts to be manufactured and supplied by the Seller, as specified in the Technical Specification in Annex1. 2.7. “Equipment Price”, means the fixed price of the Contract Equipment, specified in Annex 1, and Annex 3 excluding the Supervisory service fees as stated in Article 4.1, hereof payable by the Buyer to the Seller by two of irrevocable Letter(s) of Credit as specified in Article 5.1 under the Contract. 2.8. “Supervisory service fees”, means the lump sum charge, of the supervisory service provided by a personnel (supervisor) sent from the Seller to the Mill site, payable separate from the Contract Price by the Buyer through bank remittance to the Seller, as specified in Article 4.4, Article 5.2 and Annex 2. 2.9. “Effective Date of the Contract”, means the date that the Contract enters into force and effect upon fulfillment of all conditions stated in Article 18, namely the date on which the Seller acknowledge the receipt of an “irrevocable confirmed Letter of Credit at Sight”(hereinafter referred to as “L/C at Sight”)by thirty percent(30%)value of the Contract Price as down payment, which shall be issued by the Buyer in conformity with the Contract within fifteen(15)days from the date of the Contact signing, as specified in Article 5.1.
  • 5. pg. 5 Should the L/C at Sight, after issued, be found defective and necessary to make amendment, the Buyer shall take prompt actions to complete amending the aforesaid L/C at Sight in a proper manner within one(1)calendar week. The date, on which the Seller confirms to an advising bank the completion by the Buyer of amendment, shall be deemed to be a new “Effective Date of the Contract” for the Both Parties. In the event that the amendment of the L/C at Sight takes a time exceeding one(1) calendar week, FOB Japan delivery time of the Contract Equipment shall be affected and delay itself by the same length in excess of one one (1) calendar week. 2.10. “day” means calendar day. 2.11. “Mill site”, means the place where the Contract Equipment is installed, erected, and commissioned, namely at KTH’s new wood-chip making mill at Pangkalan Bun Province, Kalimantan, Indonesia. 2.12. “Port of Shipment”, means the international commercial seaports in Japan to be designated by the Seller. 2.13. “Port of Unloading”, means Jakarta seaport, Indonesia, as designated by the Buyer. 2.14. “Seller’s Bank”, means the following two banking companies. THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. SHIZUOKA BRANCH ADDRESS: 8 Miyuki-cho, Aoi-ward, Shizuoka-city, Shizuoka Pref. Japan Or SUMITOMO MITSUI BANKING CORP. SHIZUOKA BRANCH ADDRESS: 7-4, Ohtemachi, Aoi-ward, Shizuoka city, Shizuoka Pref. Japan 2.15. “Erection”, means the erection to assemble the Contract Equipment supplied by the Seller as specified in the Technical Specification in Annex 1. Erection shall be done by the Buyer, under supervision and advices given at the Mill
  • 6. pg. 6 site to the Buyer’s personnel by personnel (supervisor) sent out from the Seller. 2.16. “Performance Test ”, means the physical tests to be carried out by the Buyer to measure the debarking throughput capacity of the Debarker under load condition, as specified in the Performance Guarantee in Annex 4. 2.17. “Acceptance Certificate of the Performance Test (hereinafter referred to as “APT”), means the document to be signed by the both of the Buyer and the Seller and issued to the Seller upon the successful completion of the Performance Test, to confirm that the result of the Performance Test has satisfied the requirements or reached the design capacity specified in the Performance Guarantee in Annex 4. On this date, the takeover by the Buyer of the Debarker shall be done and the Mechanical Warranty commences. 2.18. “Mechanical Warranty” This is a warranty given to the Buyer for the durability of mechanical structures and functions of the Debarker, which keeps valid for the warranty period of twelve (12) months from the issuing date of the APT, but not exceeding in any case nineteen (19) months from the date of the Seller’s FOB Japan last main shipment, as specified in Article 10. 2.19. “Either Party” means either the Buyer or the Seller, and “Both Parties” means both of the Buyer and the Seller, who are specified in the Contract.” 2.20 “Engineering Drawings”, means the engineering drawings and technical information provided by the Seller to the Buyer, for the purpose of Buyer’s local fabricating and/or procuring the necessary parts and/or equipment, as specified in Annex 2. Article 3. Scope of the Contract The Seller shall, in accordance with the terms and conditions of the Contract, sell and supply on a CIF Jakarta port (Incoterms 2010) basis to the Buyer the Contract Equipment specified in Technical Specification in Annex1. Relevant services such as engineering drawings in Annex 1 and supervisory services in Annex 2 shall be provided by the Seller, as well.
  • 7. pg. 7 Article 4. Contract Price, Supervisory service fees 4.1. The Equipment Price, excluding total amount of the Supervisory service fees specified in Article 4.4, amounts to US$2,773,850.00-(CIF Jakarta port, Incoterms 2010) (say: _______- US$ only). 4.2. The Equipment Price is a fixed and firm price. 4.3. The Equipment Price shall include the Contract Equipment specified in Article 3.1,, and Annex 3, but shall not is excludeing the Supervisory service fees specified in Article 4.4, Article 5.2 and Annex 2. 4.4. Total amount of the Supervisory service fees is US$24,468.00- as a lump sum of item (G) plus item (I) shown in Annex 3, payable by the Buyer as specified in Article 5.2 and Annex 2, but not included in the Equipment Price. 4.5 The total contract price, as the aggregate of the Equipment Price and total amount of the Supervisory service fees, is US$2,797,468.00-as specified in Annex 3 4. Article 5. Payment 5.1. The Buyer shall make payment of, the Equipment Price and the Supervisory service fees, in the following method: A down payment by thirty percent(30%)value of the Equipment Price Contract Price shall be settled by a L/C at Sight which shall be first opened to the Seller by the Buyer at its own cost through the Buyer’s bank accepted by the Seller, within fifteen (15) days from the date of the Contract signing. The date on which the Seller acknowledges the receipt of the L/C at Sight issued in conformity with the Contract, shall be the Effective Date of the Contract for the Both Parties. In the event there is any non-conformity with the Contract found in the issued L/C at Sight, the Buyer shall immediately proceed amending a part of non-conformity within one(1)calendar week. The date of the amendment’s completion shall be the Effective Date of the Contract. The rest balance payment by seventy percent(70%)value of the Contract Price shall be settled by a L/C at Sight which shall be secondly issued by the Seller within three
  • 8. pg. 8 (3) months months from the date of the opening the first L/C specified in the above paragraph in this Article. In the event, whether both or either the opening of the L/C at Sight and/or the amending work is delayed from the due date, total length of such a delay exceeds a period of one(1)calendar week, FOB Japan port(s) delivery time of the Contract Equipment shall be affected and delay by the excess part of days exceeding the aforesaid one(1)calendar week. The aforesaid each payment by each of the L/C at Sight shall be executed through a negotiating bank, against presentations by the Seller of the negotiable document that shall be prepared in conformity with the stipulated in the L/C at Sight, as specified in following Article 5.1.1, and Article 5.1.2, Total amount of the Supervisory service fees, which shall be charged by the Seller to the Buyer separate from the Contract Price, shall be settled by the Buyer through bank remitting by telegraphic transfer, upon its receipt of a commercial invoice sent from the Seller, as specified in Article 5.2. 5.1.1. Down payment of the Contract Price Thirty percent(30%)value of the Equipment Price specified in Article 4.1, i.e., US$831,900.00- (say:831,900.00- US$ only) , as down payment, shall be paid by the Buyer by the L/C at Sight, against the presentations by the Seller of following document to his negotiating bank: a) One(1)original and five(5)copies of manually signed commercial invoice indicating the Contract Price, and the amount of the down payment to be paid; b) One (1) original of the “Letter of Guarantee” for the down payment, as specified in Annex 5. 5.1.2. The rest balance payment of the Equipment Price Seventy percent(70%)value of the Equipment Price specified in Article 4.1, i.e., US$1,941,100.00- (say:1,941,100.00 US$ only), as rest balance payment, shall be paid by the Buyer by the L/C at Sight, pro rata upon last main shipment, against the presentations by the Seller of following document to his negotiating bank.:
  • 9. pg. 9 a)Two (2) originals and three (3) copies of clean on board ocean Bill of Loading made out to order, blank endorsed, notifying the Buyer and marked “FREIGHT PREPAID” ; b)One(1)original and five(5)copies of manually signed commercial invoice indicating the Equipment Price, and the rest balance amount to be paid, and the itemized price; c)One(1)original and five(5)copies of packing list indicating the shipping weight, number and the date of the corresponding invoice; d) Two (2) copies of Certificate of Treatment issued by the Seller’s relevant authorities certifying that all the wood packing materials have been anti-insect infestation treated, in the event wood packing materials is used. e)One (1) original Letter of Guarantee for” Performance Bond”, as specified in Annex 7. f) One (1) original Letter of Guarantee for “Delayed Delivery Bond” specified in Article 6.1 and Article 6.4. 5.2. Payment of the Supervisory service fees Total amount of the Supervisory service fees is US$24,468.00- specified in Article 4.4 4.2, which shall be charged by the Seller to the Buyer separate from the Contract Price and settled by the Buyer through bank remitting by telegraphic transfer, upon the receipt by the Buyer of a commercial invoice that shall be issued in the full amount by the Seller at the time when a supervisor is first dispatched to the Mill site. In case any extra supervisory service, other than the initially scheduled quantity of man-days and expenses included in US$24,468.00- is additionally required or locally occurs, fees of such additional supervisory service shall be calculated at the rates specified in Annex 3 and charged on a monthly basis to the Buyer for the settlement by bank remitting upon the receipt of a commercial invoice sent from the Seller. The withholding tax for the Supervisory service fee specified in Article 4.4 and in Annex 3 shall be borne by the Seller. Article 6. Delivery and Liquidated Damages for delayed delivery 6.1. The delivery time and the Seller’s obligations under the Contract shall commence on the Effective Date of the Contract as per Article 18. The Seller shall complete the
  • 10. pg. 10 delivery of the Contract Equipment within 10 months on a FOB Japan port(s) (Incoterms 2010) basis from the Effective Date of the Contract. 6.1.1. Partial shipment will be allowed. 6.2. Port of Shipment:International seaport(s) in Japan, to be designated by the Seller. 6.3. Port of Unloading:Jakarta port, Indonesia, as designated by the Buyer. 6.3.1. The Seller shall, five(5) days before the expected date of shipment, advise the Buyer by fax or by e-mail of Contract No:_____, commodity, estimated quantity of packing, value, the number of packages, gross weight, gross measurement and the date of readiness at the Port of Shipment. 6.4. In case the Seller fails to make the delivery of the Contract Equipment within the FOB Japan port(s) delivery time specified in Article 6.1, the Seller shall pay to the Buyer liquidated damages at the following rates: Should the delivery of the last main shipment of the Contract Equipment be delayed from the date stipulated in Article 6.1, by reasons attributable to the Seller, the Seller shall pay to the Buyer liquidated damages after the grace period to six (6) weeks, as exclusive remedy for such delay in the amount of 0.5% (zero point five per cent) of the Equipment Price specified in Article 4.1 per seven (7) days. However, the aggregate amount of the liquidated damages shall not exceed 5 % of the Contract Price specified in Article 4.1. The Buyer is entitled to draw out the liquidated damages at the aforesaid rates up to the amount of Delayed Delivery Bond specified in Article 5.1.2, that is the letter of guarantee to be issued by the Seller’s bank, in such a form specified in Annex 8 9. A copy of this letter of guarantee shall be submitted to the Buyer within 5 (five) months from the Effective Date of the Contract and valid until 1 (one) month after final shipment date. 6.5 In the event that the Buyer, on the due date specified in Article 5.1 and after a grace period to one (1) calendar week, fails to issue to the Seller the L/C at sight for the rest balance payment by seventy percent(70%)value of the Equipment Price and/or fails to complete making the L/C’s amendments if any, the same number of days in excess of the grace period of one (1) calendar week shall be added to the length of FOB
  • 11. pg. 11 Japan port(s) delivery time specified in Article 6.1. Article 7. Packing and Marking 7.1. The Seller shall have the Contract Equipment packed strongly and shall take measures to protect the Contract Equipment from moisture, rain, rust, corrosion and shock, etc. The packing material made of coniferous wood, if any, shall be anti-insect- infestation treated and a certificate of treatment to be presented to the Buyer, as specified in the item (d) in Article 5.1.2. 7.2. The loose accessories in package or bundle shall be labeled by the Seller, indicating Contract No., name of main equipment, name of accessories and their position number and accessory number marked on the bill of material and packing list in English. Spare parts and tools shall be marked with the words” SPARE PARTS” or “TOOLS” besides the above-mentioned particulars. In accordance with the requirements in loading, unloading and shipping Contract Equipment, such packages shall be conspicuously marked in English with “HANDLE WITH CARE”, “RIGHT SIDE UP”, “KEEP DRY” and other terms appropriate in the international transportation. 7.3. Two(2)duplicate copies of detailed packing list shall be enclosed or attached to each package of the Contract Equipment. Article 8. Inspection 8.1. The Seller shall inspect the Contract Equipment in accordance with its normal quality inspection program. 8.2. During a period of the Seller’s manufacturing the Contract Equipment or parts thereof, the Buyer or its authorized representative shall be entitled to carry out inspections in regard to the quality of the materials used as well as compliance with relevant documentation. Such inspections shall be carried out at the place of manufacture during normal working hours without undue disturbance of the manufacture at times
  • 12. pg. 12 separately agreed upon between the Both Parties in each case. All expenses relating to such inspection shall be borne by the Buyer. 8.3 The Buyer shall, within a period not exceeding one(1)calendar week from the arrival date of the Contract Equipment at the Mill site, carry out its own inspection into the inside of the packages or containers in order to ascertain no occurrence of damage, defect, shortage, deficiency, or discrepancy on the Contract Equipment. In case any such non-conformity is found, the Buyer shall immediately keep the Seller informed of it. 8.4. Should any shortage, defect or other non-conformity with the contract, attributable to the Seller, be found with the delivered Contract Equipment during the open package inspection, an inspection certificate shall be issued by the Inspection Authorities and be taken by the Buyer as effective evidence to claim against the Seller. In the event that any short shipment, defective or wrong goods of the Contract Equipment is attributable to the Seller, the Seller shall replace and/or supplement the shortage and/or undelivered pieces of equipment free of charge on Delivery Duty paid (DDP) basis to Buyer’s office in Jakarta without undue delay upon receipt of the Buyer’s claim. Any defect or shortage to the Contract Equipment which is not attributable to the Seller shall be replaced without undue delay against separate remuneration. Article 9. Erection, Commissioning, Performance Test, 9.1 The Erection, Commissioning and Performance Test of the Contract Equipment shall be carried out by the Buyer on its responsibility, under the supervision and support by a personnel (supervisor) sent out to the mill site from the Seller. 9.2. Conditions and details of types of fees and rates, as well as the fee of supervisory service, to be rendered to personnel of the Buyer by a personnel (supervisor) sent to the Mill site from the Seller, are as specified in Annex 2 3 and shall be born by the Buyer. 9.3. The starts and completions of each Erection, Commissioning and Performance Test,
  • 13. pg. 13 shall be carried out, by keeping the original schedule of the project, as specified in the Preliminary Schedule in Annex 10. Article 10. Guarantee and Warranty 10.1. The Seller guarantees that the Contract Equipment shall be brand new, unused and manufactured for the Contract, shall be in accordance with the Technical Specification. The Contract Equipment shall be suitable for the use and purpose under the Contract. 10.2. The Seller guarantees that the Technical Specification shall be complete and correct so as to meet the requirements of design, erection, commissioning, and performance test of the Contract Equipment. 10.3. Mechanical Warranty The Seller undertakes to remedy any defects in the Contract Equipment or any part thereof resulting from faulty design, materials, workmanship or misleading by the supervisor(s) dispatched by the Seller during a warranty period of twelve(12)months from the date of issuing the APT, however, not exceeding nineteen(19)months from the date of the last main shipment of the Contract Equipment FOB Port of S (Incoterms 2010)as applicable. During a warranty period, in the event the Seller neither makes any response nor takes any action except keeping silence to the Buyer for a period exceeding thirty(30) days from the date when the Seller is first noticed by the Buyer of defects or damage on the Contract Equipment and requests for remedy or repair, the Buyer is entitled to draw out up to the amount of Warranty Bond, that is the Letter of Guarantee for 5% of the Equipment Price to be issued by the Seller’ Bank valid from date of the APT for twelve (12) months in such a form specified in Annex 7 8 and to be submitted to the Buyer upon the APT being issued. 10.4. Limitations of Mechanical Warranty 10.4.1 The Mechanical Warranty shall not be deemed to cover normal wear or tear;any defects resulting from improper, incomplete or unskilled maintenance, handling, storage, erection or operation of or any modification made by the Buyer to the Contract Equipment. The Buyer shall bear the dismantling and erection expenses relating to the reparations or replacements. The Seller’s obligations under the
  • 14. pg. 14 Mechanical Warranty shall in no case extend beyond the Contract Equipment as specified in the Technical Specification in Annex 1. However, the Seller shall, upon the Buyer’s request, pay quick attention to it in order to determine and inform the Buyer what is the best and most reasonable solution whether to dispatch the necessary parts for replacement, or to submit the detailed procedures for local repair, or dispatch its own personnel (technician) for repair, against remuneration. 10.4.2. The valuation on the defects as specified in Article 10.4.1 shall be determined based on the written consent from the Both Parties. 10.4.3. If the Both Parties failed to reach an Contract on the defects as specified in Article 10.4.2, than the Both Parties hereby agree that the valuation on the defects shall be determined based on the examination that is conducted by an independent expert that will be appointed and agreed by the Both Parties. 10.5. Performance Guarantees The Seller shall guarantee to the Buyer, “debarking throughput capacity” specified in the Performance Guarantee in Annex 4 5. In case the result of the Performance Test with the Debarker under all the conditions and the procedures in Annex 4 5 is found by no means able to attain, the design throughput capacity values specified in the Performance Guarantee in Annex 4 5, the Buyer is entitled to draw out up to the amount of Performance Bond specified in Article 5.1.2, that is the Letter of Guarantee to be issued by the Seller’s Bank in a such alike sample form specified in Annex 6 7 and submitted to the Buyer. Article.11. Claim 11.1. In case the Contract Equipment is not in accordance with the Technical Specification in Annex 1, or fails to fulfill the Performance Guarantee specified in Article10.5, prior to the APT due to the Seller’s responsibility, during the design, manufacture, Erection, Commissioning, Performance Test, the Buyer has the right to lodge claims against the Seller for the following remedies: a. Repair defective Contract Equipment or eliminate the defects or discrepancies if any on the Contract Equipment, at the Seller’s expenses.
  • 15. pg. 15 b. In case the Seller fails to dispatch his personnel to the Mill site, the Buyer has the right to eliminate the defects or discrepancies by himself for the Seller’s account. 11.2. Limitation of liability Notwithstanding anything aforesaid, it is expressly agreed that neither party shall bear any responsibility for consequential or indirect damage of the other party. Article. 12. Infringement of patents 12.1 In the event of a claim by any third party against the Buyer based on the infringement of any intellectual property rights arising from the use of the Contract Equipment, the Buyer shall give the Seller a notice and the Seller shall take up the matter with the third party at its own cost in the Buyer’s name and with the Buyer’s assistance and indemnify the Buyer for any costs, compensations or damages to the Buyer arising therefrom. Article. 13. Termination 13.1. The Buyer may, for the Seller’s breach of the Contract, by written notice of default sent to the Seller, terminate the Contract in whole or in part; if the Seller fails to perform any obligations under the Contract and does not remedy its failure within a period of sixty(60)days after the receipt of the default notice from the Buyer. 13.2. The Seller may, for the Buyer’s breach of the Contract, by written notice of default sent to the Buyer, terminate the Contract in whole or in part; if the Buyer fails to perform any obligations under the Contract and does not remedy its failure within a period of sixty(60)days after the receipt of the default notice from the Seller. 13.3. The Seller shall specifically be entitled to terminate the Contract in whole or in part with immediate effect by written notice to the Buyer stating the cause of termination, if the opening by the Buyer of the L/C at Sight by thirty percent (30%) value of the Contract Price under Article 5.1 and Article 5.1.1 has been delayed for more than forty (40)days from the date of the Contract signing.
  • 16. pg. 16 The Seller shall specifically be entitled to terminate the Contract in whole or in part with immediate effect by written notice to the Buyer stating the cause of termination, if the opening by the Buyer of the L/C at Sight by seventy percent (70%) value of the Contract Price under Article 5.1 and Article 5.1.2 has been delayed for more than one hundred and forty four (144) days from the date of the Contract signing. In the case where the Contract is terminated by the Seller in this manner, although the Seller shall be entitled to wholly use the down payment as a part of liquidated damages to the various costs of such as purchasing component parts and raw material for the manufacture, engineering and drawing, ordering from the subcontractors, and others that have occurred at the Seller during the period until the termination of the Contract, the Buyer shall keep its responsibility for promptly compensating the Seller for if any part of cost borne by the Buyer in excess of the amount of down payment by settling the relevant charge if any arising from the Seller. 13.4. The party to this Contract may at any time terminate the Contract, by giving written notice to the other Party in case the same becomes bankrupt or otherwise insolvent, provided that such termination does not prejudice or affect any right of action or remedy which has accrued or will accrue thereafter to the Party hereto. Article. 14. Force Majeure 14.1. Should Either Party be prevented from performing any of its obligations under the Contract due to the event of Force Majeure, such as war, serious fire, typhoon, earthquake, flood and any other events which could not be expected, avoided and overcome, the affected party shall notify the other party of occurrence of such an event by fax or e-mail and send by registered airmail a certificate issued by competent authorities or agency confirming the event of the Force Majeure within fourteen(14) days following its occurrence. 14.2. The affected party shall not be liable for any delay or failure in performing any of its obligations due to the event of Force Majeure. However, the affected party shall inform the other party by fax or e-mail the termination or elimination of the event of Force Majeure as soon as possible. 14.3. The Both Parties shall proceed with their obligations immediately upon the cease of
  • 17. pg. 17 the event of Force Majeure or the removal of the effects and the term of the Contract shall be extended correspondingly. Should the effect of the event of Force Majeure last for more than one hundred and eighty(180)days, Either Party has the right to terminate the Contract by a written notice. Article. 15. Governing Law 15.1. This Contract is governed by, and shall be construed in accordance with, the laws of the Republic of Singapore. 15.2. Any power of attorney or other document executed in connection with this Contract or the transactions provided for in this Contract will be governed by, and construed in accordance with, the laws of the Republic of Singapore. Article. 16. Taxes and Duties 16.1. All taxes, duties, levies and cess,(Excise Duty, Central Sales Tax, Service Tax including cess, Entry Tax, State VAT, Local Sales Tax, Tax Deduction at Source, and etc.)payable in Indonesia pursuant to existing and/or new laws and/or regulations in connection with this contract shall be borne and paid by the Buyer. 16.2 All taxes, levies and duties arising inside Japan in connection with the Contract shall be born by the Seller. Article. 17. Arbitration 17.1. Any disputes arising out of or in connection with this Contract shall be settled through friendly discussion between both parties. In case no Contract is reached, the disputes shall be finally settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce by the arbitrators appointed in accordance with those Rules. The arbitration shall take place in Singapore, and shall be conducted in the English language. 17.2. Notwithstanding any reference to arbitration, both the Both Parties shall continue to perform their respective obligations under the Contract unless otherwise agreed.
  • 18. pg. 18 Article. 18. Effectiveness of the Contract and Miscellaneous 18.1. The Contract shall become effective, after signing the Contract by Both Parties, with the following conditions: a)Receipt by the Seller of an irrevocable confirmed Letter of Credit at Sight (referred to as “L/C at Sight”) which is issued by the Buyer in favor of the Seller through the Buyer’s bank accepted by the Seller, and is in conformity with the stipulated in Article5.1.1 in the Contract. b)Receipt and acknowledgement by the Seller of, amendments completed by the Buyer to the first issued L/C at Sight, in case of occurrence of some discrepancy or non-conformity in it. Upon the completion of the above conditions, the Buyer and the Seller shall exchange faxes or e-mails to confirm the date on which the execution of the Contract starts. Should the Contract not come into force latest twenty(20)days after the Contract signing by Both Parties, the Seller reserves his rights to adjust FOB Japan port(s) delivery time. 18.2. The validity period of the Contract is three(3)years. Any unsettled credit and debt under the Contract shall not be affected by the expiration of the Contract. The debtor shall affect its obligation of reimbursement to the creditor. 18.3. The Contract shall be made in four(4)originals, two(2)for the Buyer and two(2) for the Seller. 18.4. Annexes to the Contract are integral parts of the Contract and shall have the same legal force as the text of Contract itself. In case of discrepancy between the text of the Contract and Annexes, the text of the Contract shall prevail. 18.5. All amendments, supplements and alterations to the terms and conditions of the Contract shall not become binding unless made in written form, signed by the authorized representatives and approved by respective authorities if required. 18.6. Unless otherwise specified in the Contract, any terms of delivery shall be interpreted in
  • 19. pg. 19 accordance with International Rules for the Interpretation of Trade Terms (Incoterms 2010 ) and GENERAL CONDITIONS FOR THE SUPPLY OF PLANT AND MACHINERY FOR EXPORT 188 (United Nations Economic Commission for Europe). Any Letter of Credit to be opened hereunder shall be in accordance with ICC Uniform Customs and Practice for Documentary Credits (UCP500). 18.7. No assignment of this Contract or any right or obligation under the Contract shall be made by the Either Party to a third party without the previous consent of the other party. 18.8. Notices 18.8.1. The communication between the Both Parties shall be conducted in English in written form. Any notice or other formal communication between the Both Parties shall be conducted in English in written form and may be delivered in person, or sent by post or fax to the party to be served at as follows: To the Buyer: PT. ____________ ______________(Address) Indonesia Fax. : Tel. : E-mail: Attn. : To the Seller: _________________., Ltd. ______________(Address) Japan Fax. : Tel. : Attn. : or at such other address or fax number as it may notify to the other party under this clause. Any notice or other document sent by post shall be sent by recorded delivery post (if the place of destination is the same as its country of origin) or by overnight courier (if its destination is elsewhere). 18.8.2. Any notice or other communication shall be deemed to have been given: a) if delivered in person, at the time of delivery; or b) if sent by post, at 10.00 a.m. on the second business day after it was put into the post or at 10.00 a.m. (local time at the place of destination) on the fifth Business
  • 20. pg. 20 Day after it was put into the post by overnight courier; or c) if sent by fax, on the date of transmission, if transmitted before 3.00 p.m. (local time at the place of destination) on any Business Day and in any other case on the Business Day, following the date of transmission. 18.8.3. In proving the giving of a notice or other communication it shall be sufficient to prove that delivery in person was made or that the envelope containing the communication was properly addressed and posted, either by recorded delivery post or by prepaid airmail, as the case may be, or that the fax was properly addressed and transmitted, as the case may be. 18.9. Except as otherwise expressly provided herein, nothing in this Contract shall be considered or interpreted as constituting the relationship of the Both Parties as a partnership, association, or other relationship in which a Party may be liable for the acts of omissions of any other Party, and nothing in this Contract shall be construed so as to constitute a Party has any right or authority to assume or create in any way any obligation of any kind or to make any warranty or representations, expressed or implied, in the name or on behalf of any other Party. 18.10. If at any time any provision of this Contract is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, this shall not affect or impair: the legality, validity or enforceability in that jurisdiction of any other provision of thisContract ; or the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of thisContract . 18.11. This Contract constitutes the whole contract between the Both Parties relating to the transactions contemplated by this Contract and supersedes all previouscontracts, whether oral or in writing, between the Both Parties relating to these transactions. Article. 19. Liability of the Seller Irrespective of the legal reason, the Seller shall not be liable for any indirect or consequential damages such as but not limited to:loss of or reduced production, loss of or reduced profit, loss of materials of production, increased cost of production, or of damages not incurred on the goods of the Seller’s delivery themselves.
  • 21. pg. 21 Article.20. Others 20.1 The Buyer is responsible for supplying an adequate number of qualified and capable laborers to the Seller during the period of Erection, Commissioning and Performance Test. 20.2. The Buyer shall supply the Seller with all technical data and necessary information, if any needed for the Seller’s engineering, designing, and etc., as soon as possible. Article. 21. Annexes Following Annexes under this Contract shall form an integral part of this Contract and shall have the same force as the Contract itself: Annex 1. : Technical Specifications Annex 2 : Supervisory Service Annex 3 : Price Schedule Annex 4 : Performance Guarantee Annex 5 : Refund Bond Annex 6 : Performance Bond Annex 7 : Warranty Bond Annex 8 : Delayed Delivery Bond Annex 9 : General Conditions for the Supply of Plant and Machinery for Export 188 (United Nations Economic Commission for Europe ECC) Annex 10 : Preliminary Schedule
  • 22. pg. 22 IN WITNESS WHEREOF, the Both Parties hereto have caused their duly authorized representatives to execute this Contract the day and year first written above. The Buyer:PT. ________________________ by ----------------------------------------------- Mr._________________ Title: Director The Seller:_________________., LTD. by ----------------------------------------------- Mr. ________________ Title: President Director